How to Read an Indiana School Referendum Question
Election Day is coming up – on Tuesday, May 3 – and school referendums will be on the ballot in nine school districts. It’s best if voters investigate the referendum issues in advance, so they know whether to vote yes or no. A voter might compare the benefits and costs of the referendum tax increase. The benefits are improved education through added money for teachers or new facilities. The costs are added property tax payments.
What if you didn’t do your homework and want to do the benefit-cost comparison on the fly, in the voting booth? Over the years the Indiana General Assembly has added requirements to the referendum ballot questions to try to help.
Providing ever-more information about benefits and costs means the ballot questions are getting longer. Ten years ago, in May 2012, six school referendum ballot questions averaged 60 words on five lines. Five years ago, in May 2017, 10 referendums averaged 83 words on seven lines. This May, the nine referendums average 136 words on 12 lines.
Be prepared to do some reading!
The ballot question includes a description of proposed spending to help voters evaluate the referendum’s benefits. In Griffith Public Schools, for example, the referendum will pay for safety and security, retaining and attracting teachers and staff, and programs to expand student education and career opportunities.
The ballot question also helps voters measure costs. A homeowner’s cost is how much their property tax bill will rise if the referendum passes. In the past, the ballot question would list the added tax rate, in dollars per $100 assessed value.
Many people have a pretty good idea of the value of their homes, from recent sales in their neighborhoods. The gross assessed value for property taxes is based on that value. Unfortunately, the referendum tax rate is multiplied by the net value of the home, after deductions.
Net assessed value is available from the mailing that taxpayers get from the county treasurer each year, at the top in Table 1. In the Griffith school district, an average $180,000 home has a net assessed value (after deductions) of $87,750. The added referendum tax rate is almost $0.33 per $100 assessed value, so the average homeowner would pay an extra $289 per year.
That’s a tough calculation to make in the voting booth, even if you remembered to look up your net assessed value. So the General Assembly introduced new ballot language. Instead of giving the tax rate, the Griffith ballot says “the average property tax paid to the school corporation per year on a residence would increase by 48.39 percent.”
They may not know their net assessed value, but it’s possible that homeowners know how much they pay in property taxes, especially in the month of May. The first tax installment is due in May, so some homeowners will have written a check for half the annual amount. Federal income taxes are due in mid-April, and many homeowners deduct their property taxes. They will have recorded the amount only a few weeks before.
So a homeowner could apply 48.39 percent to their tax bill to estimate the added cost. Except, that’s not what the ballot question says. The percentage is calculated on the part of the tax bill that is “paid to the school corporation.” The whole tax bill includes the county, city, township, library district and special district taxes.
In Griffith the owner of a $180,000 home would be at the 1 percent circuit breaker cap, so the total tax bill would be $1,800. Griffith schools get $597 of that amount, about 33 percent. If the referendum passes, the school tax bill rises by 48.39 percent of $597, which is $289, same as before. That’s a 16 percent increase in the total tax bill.
Homeowners may know their total tax bills. It’s less likely that they know the fraction that goes to the schools. They could look it up. The number is available on the treasurer’s property tax mailing, in Table 3.
Comparing benefits and costs is a reasonable way to decide your vote. To avoid holding up the line at the voting booth, though, read the ballot question and do your cost calculations before you leave for the polls.
Category: Agricultural Economics, Extension
Tags: property assessment, property tax, referenda